8 Jul 2010

North South Finance in receivership

5:01 pm on 8 July 2010

A finance company whose directors face legal action for allegedly misleading investors has been placed in receivership.

Investors in North South Finance agreed to a revised repayment plan in late 2008, and so far have been repaid 55 and a half cents in the dollar.

On Wednesday, the Securities Commission charged the company's directors, Vance Arkinstall and Rick Bettle, with failing to give investors a true picture of the firm's financial position.

Mr Bettle says it is inappropriate to continue to operate in the light of the charges, so he has asked the company's trustee to appoint receivers. KordaMentha has been appointed.

Mr Bettle and Mr Arkinstall are directors of a related company, Dominion Finance Group, which collapsed in 2008 owing $176.9 million to about 5,900 investors. All its directors are also facing charges.

The Securities Commission claims both companies' key documents to investors, and their advertisements, failed to give a true picture of their financial position. It also alleges Dominion Finance Group misrepresented the risks to investors.

If found guilty, the directors face up to five years in jail and penalties of hundreds of thousands of dollars.

The commission says its investigations are continuing.